USDA on Friday delivered estimates of U.S. corn and soybean crop size that were below the average of trade expectations.
USDA slashed both yield and harvested acreage estimates. Even after sharply cutting its corn demand and export estimates it projects that corn stocks at the end of 2012-13 will amount to only three weeks supply.
However, it was a case of buy the rumour, sell the fact and corn futures are down a little at noon CST.
Oilseed prices are fairing better.
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U.S. grains: Corn futures edge up, soybeans sag on improving US crop ratings
Chicago Board of Trade corn futures extended slight gains on Tuesday as short covering and bargain buying continued to support a rebound from contract lows reached during the previous session.
At noon CST, Winnipeg November canola is up about $7.20 at $616.30 per tonne.
Chicago November soybeans are up about one percent.
The nearby August contract is losing strength and is now up about one percent after climbing almost two percent earlier. The more bullish attitude in oilseeds reflects the new immediate import demand from China talked about this week.
After an initial bounce higher to a new record, December corn at noon CST is down 11.25 cents from Thursday’s close. Minneapolis wheat is down about 1.6 percent.
This quote in a Reuters story might explain the corn market reaction.
“Did we feed the bull? I don’t think we did, for the corn,” grains analyst Mike Zuzolo of Global Commodity Analytics told Reuters.
“USDA cut the corn yield more drastically than the trade was guessing, as far as the average trade guess. But they took total demand down and they added to old crop stocks. So I would give the corn a neutral report,” he added.
Larger than expected world wheat production projections also put pressure on the grain side.
Here are USDA’s numbers for American crop production this year:
• CORN 10.779 billion bushels. The trade, on average, expected 11.026 billion. Last year the crop was 12.358 billion.
The average yield was pegged at 123.4 bushels per acre, below estimates for 127.3 bushels. Last year’s yield was 147.2 bu. per acre.
USDA lowered its demand numbers, dropping feed demand to 4.075 billion bu. from 4.8 billion and food, seed and industrial, which includes ethanol production, to 5.85 billion from 6.320 billion.
Exports were lowered to 1.3 billion from 1.6 billion.
It also had a carry in stocks number of 1.02 billion bu., which was higher than expectations.
The result was an 2012-13 ending stocks number of just 650 million bu., slightly lower than the trade expectation of 660 million and well below last year’s 1.021 billion.
• SOYBEANS 2.692 billion bu. The average trade pre-report estimate was 2.817 billion. Last year’s crop was 3.056 billion
The yield projection is 36.1 bu. per acre, down from last year’s 40.5 bu.
Ending stocks are projected at 115 million bushels, compared to the trade guess of 112 million
But the strong demand seen this week from China for U.S. soybeans kept traders in a bullish frame of mind and kept the pressure on for higher prices to discourage demand.
• ALL WHEAT 2.268 billion bu. The average trade guess was 2.205 billion. Last year the crop was 1.999 billion.
• SPRING WHEAT 463 million bu. The trade expected 484 million bushels on average and last year production was 455 million.
• DURUM 86 million bu. That is up from the pre report trade estimate of 82 million bu. Last year the crop was just 50 million bushels.
• WORLD WHEAT 662.83 million tonnes, down from USDA’S projection last month of 665.33 million. While USDA cut world production and ending stocks, the reduction was not as much as expected. It cut Russian wheat production to 43 million tonnes from 49 million. Kazak production was dropped to 11 million from 13 million last month but Ukraine production was raised to 15 million from 13 million last month.
It also raised its wheat production outlooks for India and Canada.
It sees Canadian production at 27 million tonnes, up from 26.6 million in last month’s projection.
